August is often a miss
BMO analysts note that over the past 22 years the August jobs reprot is below consensus 77% of the time and beats expectations 23% of the time. The average miss (-48K) is also much larger than the average beat (+18K).
The consensus for tomorrow's report is +160K but the market is likely leaning higher after today's ADP report showed 195K new jobs. However that's in contrast to the employment component of the ISM report, which fell to 53.1 from 56.2.
Another area to watch is average weekly hours, which slipped to 34.3 last month. Ian Shepherdson from Pantheon notes that it was compressed due to calendar effects in July so it will probably rebound. The consensus is 34.4. For the jobs report he forecasts a rise of 180K.
"After ADP I'd say the chance of a 200K-plus official payroll reading tomorrow is about 40%. If it happens, great. But it probably won't happen again in this cycle," he wrote today and also warned that the ISM employment component is a good forward-looking indicator.
